Nervousness in inventory management: Comparison of basic control rules

Using a rolling horizon planning framework in inventory control leads to nervousness in the planning system caused by instability of order release decisions in successive planning cycles. For a single-stage inventory system with arbitrary stochastic demand it is shown analytically, how planning stability is affected by policy parameters if (s,nQ), (s,S), and (T,S) control rules are applied. It turns out that the reorder point s does not influence stability whereas the lot size determining parameters Q, S–s, and T can have a considerable impact. However, this influence turns out to be quite different for different measures of stability regarding order setup or order quantity deviations, respectively. Using these planning stability results the priority of the different control rules under the aspect of nervousness is discussed.